Payment transactions are settled one by one on a continuous basis in central bank money with immediate finality. There is no upper or lower limit on the value of payments. TARGET2 mainly settles operations of monetary policy and money market operations.

TARGET2 has to be used for all payments involving the Eurosystem, as well as for the settlement of operations of all large-value net settlement systems and securities settlement systems handling the euro.

TARGET2 is operated on a single technical platform. The business relationships are established between the TARGET2 users and their National Central Bank. In terms of the value processed, TARGET2 is one of the largest payment systems in the world.

The third lesson from Cyprus is that the relationship between banks, sovereigns and the eurozone is more complicated than it once appeared. One could conclude that the action over Cyprus tells us little about the monetary area. After all, the island is unique because of the size of its banking liabilities, the unpopularity of its banks’ creditors and the borderline insolvency of its state. Or one could believe it is a template, but only for other countries with similarly weak states. Or you could see it as a template for all eurozone states, except when there is a financial crisis of 2008 dimensions. Finally, an observer could believe Cyprus is a template for all eurozone states in all circumstances. Which of these readings is right? Nobody knows. But it is probably the first or the second. A consensus on the principle that creditors, not taxpayers, should pay if a bank becomes insolvent does not yet exist across the eurozone. Does anybody imagine the German government would not rescue Deutsche Bank if it were in trouble? Of course it would.

Jacques Sapir, “Cyprus between Germany and Russia”, note published on the blog Russeurope on 24/03/2013, URL: http://russeurope.hypotheses.org/1082

The Game of GermanySo that’s where we are. The Cypriot government must present a “plan B,” based on a staggered repayment fund based on future gas resources and excluding any idea of a tax. This plan will be most probably rejected by the ECB and the Eurogroup, if one is to judge by the German declarations. Either the Cypriot government gives in to the pressures of the ECB, and the Parliament re-votes by Tuesday morning a text which will be very close to the one it had rejected last Tuesday, or we will be headed in the direction of a dramatic intensification of the crisis. Which could well end up in a partial collapse of the Cypriot banking system, a massive flight of capital estimated to 30 billions, and the exit of this country from the Eurozone.This makes us come back to the logic behind the German position. It is clear that the German leaders, but also the German representatives at the ECB, tend to minimize the capacities of contagion emanating from the Cyprus crisis. But this is not the only reason. The German banks are ailing, and this fact counted for much in the reticence of Mrs Merkel to the project of a Banking Union, of which we know it will only come into effect in 2014. Now, it happens that every time there is a crisis in the Eurozone, we see an important transfer of capital in the direction of Germany, thus improving the situation of the banks. One might therefore consider that the combination of an ideological position, which is an important matter in a pre-electoral period, joined to a latent contempt for Cyprus and the Cypriots, and of well-understood self-interests, are pushing the Chancellor to adopt an intransigeant position on the Cypriot crisis. If this is the case, all conditions are together for this crisis to play itself out in the most dramatic way possible.

@StVitusGerulaitis - My theory is that they know it is a failure and that "more integration" is being used as a cover to protect German and Dutch interests before they then allow the whole thing to collapse.I would seem the only rational explanation for Dieselbomb's behaviour in recent days is that he is attempting to consolidate Netherlands and Germany at the cost of southern Europe.Dieselbomb, having overseen the liquidation of a Dutch bank, must be fully aware of the weaknesses in the Dutch banking system (and in their real estate sector). When he became finance minister, he said that he was determined to fight for Dutch interests.Cyprus was a big threat to German and Dutch interests, because - before its banking sector was crushed - it could feasibly have chosen to exit the eurozone. (Now, with its economy destroyed, it barely has this option.)It was thus imperative for Dieselbomb and Schauble to prevent this, because if Cyprus had made a successful exit, this would have encouraged larger countries (Italy) to choose the same course - which, in turn, would have meant bankruptcy for the northern banks - and penury even for mighty Germany.The events of the last two weeks may have looked like a junior high school theatrical production, but it may have been simulation....The task for Dieselbomb and Schauble is to maintain the charade of "more integration" to dissuade the southern European countries from making a disorderly exit from the euro zone.Meanwhile, of course, they step up their campaign to undermine southern European countries' banks and create chaos in their economies for two purposes: 1, to increase capital flows from south to north; 2, to weaken the southern European countries both politically and economically, thus rendering a euro exit even more difficult for them.Once German and Dutch interests have been secured, they will then let the euro zone fall apart.

It was then reported this morning that the Cyprus Central Bank Governor, Panicos Demetriades, summoned the Bank of Cyprus CEO this morning and asked him to resign. Let me guess; the new Administrator will be Franz Stupenmeister or some name of that ilk. Then the European Parliament President just said that the way "the Cyprus case was handled is no way to do business in the EU." I don't know; the Press must have gotten it wrong. It must not have been the EU that handled the Cyprus fiasco, it must have been Mongolia and no one has told us yet.

The pigs are flying I tell you; the pigs are flying.

To top all of this off, the cherry on the whipped cream, the banks of Cyprus just re-opened in Greece this morning. I don't know, the flights from Moscow to Athens must be jammed. There are no capital controls in Greece so you can take out what money you like while the banks in Cyprus are still closed and now subject to capital controls. "Sense" and her brethren "logical," "rational" and "coherent" must have all departed from Europe in a huff. No one could make this up; no one.

Rush to quell panic over BoCTHE GOVERNMENT yesterday ran to put out the fire it accused the Central Bank of starting over the future of the Bank of Cyprus (BoC), highlighting the growing rift between the presidential palace and the CB governor. A short Central Bank announcement on the appointment of a special administrator for the BoC yesterday morning sparked all-out panic among Bank of Cyprus employees that the island’s largest lender awaited the same fate as Laiki (Popular) Bank - a wind down. Within hours, hundreds of distraught BoC employees gathered outside the Bank of Cyprus’ headquarters in Nicosia before moving their demonstration to the neighbouring Central Bank building, shouting for the resignation of CB governor Panicos Demetriades. 4 hours

Illustration by Belle MellorEurope's flesheaters are back. The claim that the worst of the eurozone crisis is behind us now looks foolish. The deal forced on Cyprus by the German-led Troika at the weekend isn't a bailout: it will effectively destroy the island's economy. Instead of getting a grip on its grossly inflated banks, it will impose a brutal credit contraction, combined with sweeping cuts and privatisations, wiping out perhaps a quarter of Cyprus's national income. Ordinary Cypriots, not Russian oligarchs, will pay the price.